ASX 200’s pumping Friday, but Telstra’s not. What’s going on?

After a jubilant time on Wall Street overnight, the S&P/ASX 200 Index (ASX: XJO) is following suit on Friday.

At lunchtime, the Australian index was going for 2.75% higher, lifting the mood for all investors.

Even though ASX technology shares were leading the rally, the two biggest telecommunications stocks were underperforming. Telstra Group Ltd (ASX: TLS) shares were up just 1.14% and the TPG Telecom Ltd (ASX: TPG) stock price was 1.55% higher. 

So what’s going on?

A promise that couldn’t be fulfilled

The muted investor enthusiasm might have to do with a federal court ruling that was revealed on Friday morning.

The Australian Competition and Consumer Commission (ACCC) announced it was successful in its court case against the two ASX-listed giants — plus the number two player Optus — in getting them to admit they misled consumers on NBN speeds. 

Telstra was penalised $15 million, Optus $13.5 million and TPG was fined $5 million for breaching Australian consumer law.

The offences related to the companies’ statements about their 50Mbps and 100Mbps fibre-to-the-node plans.

Each telco promised to tell customers within a reasonable time if their actual NBN speeds could not reach the plan they were paid for. The companies all claimed those customers would be offered a slower and cheaper plan with a refund.

That was found to be misleading because none of the companies actually had “adequate systems, processes and policies” to fulfil the promise.

“Some customers may have paid for a 50 or 100Mbps plan believing their NBN connection could support the higher download speeds, even though they would have been better off paying for a lower speed plan,” said ACCC commissioner Liza Carver.

“It is illegal for businesses to make false or misleading representations to consumers about the performance characteristics, nature, standard or quality of products and services.”

Almost 120,000 customers were impacted by the breach across the three internet providers.

According to the consumer watchdog, all three telcos have now implemented remediation programs and contacted affected customers to dish out refunds.

Telstra, Optus and TPG were also ordered to pay a part of the ACCC’s legal costs.

The post ASX 200’s pumping Friday, but Telstra’s not. What’s going on? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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